PARIS (MNI) – The search for the origin of recent financial crises
should focus on the parallel explosion of capital flows and global
liquidity, European Central Bank Governing Council member Christian
Noyer said Friday.
International capital flows have increased seven-fold over the past
two decades, and the rise in their volatility represents “a new source
of risk,” the governor of the Bank of France told a conference here.
“The sudden withdrawals of international capital have played a
major role in triggering and spreading financial crises over the past 15
years,” he said. It is “crucial” to examine this “not only from the
narrow perspective of the management of capital flows, but also from the
wider perspective of global liquidity.”
The still unresolved issue of “the appropriate level for the supply
of safe and liquid international assets and the international monetary
and financial system best able to provide this” is at the “heart” of
France’s presidency of the G20 this year, Noyer noted.
Even though the role of global imbalances in triggering the last
crisis “is still a matter of debate, their coincidence with the rise of
financial imbalances in several economies, such as the credit and
securitization boom, the sharp increase in asset prices, government
deficits, etc, is striking,” Noyer asserted.
“In short, the issue of global imbalances and that of regulation in
a global economy are undeniably closely linked,” he said.
–Paris newsroom +331 4271 5540; stephen@marketnews.com
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